Restoring Quality Health Care: A Six-Point Plan for Comprehensive Reform at Lower Cost

By Scott W. Atlas

The Affordable Care Act (ACA) granted the federal government unprecedented regulatory authority over health insurance and the health care industry. Those changes ignore the fundamental problems with the existing system: the incentives that have caused runaway costs and excluded millions of Americans from accessing the world's best medical care. Many former ACA supporters now push for an even more extreme takeover of the US system: overt single-payer health care, or “Medicare for All.”In Restoring Quality Health Care, Dr. Scott W. Atlas offers a fundamentally different approach to improving America's health care system. Instead of framing the debate with the traditional trade-offs—fewer benefits versus higher taxes—his plan is modeled around a new paradigm: restoring the appropriate market-based incentives to increase the quality of health care and reduce its costs. He proposes a six-point reform plan for US health care centering on lower-cost catastrophic coverage and universal, significantly expanded health savings accounts (HSAs). The plan transforms the US health care system and enhances innovation by instilling market-based competition and empowering consumers through incentives and strategic deregulation. Most important, the health care reforms in this plan reflect the key principles held by Americans concerning what they value and expect from health care in terms of access, choice, and quality.

• Language: English
• Publisher: Independent Publishers Group
• Release date: Sep 8, 2020
• ISBN: 9780817923969

Scott W. Atlas

Scott W. Atlas, M.D. is the Robert Wesson Senior Fellow in health care policy at the Hoover Institution of Stanford University. Dr. Atlas investigates the impact of the government and the private sector on access, quality, and pricing in health care, global trends in health care innovation, and key economic issues related to the future of technology-based medical advances. He is a frequent policy advisor to policymakers and government officials in the United States and other countries. He has served as Senior Advisor for Health Care to several numerous candidates for president, as well as counseled members of the US Congress on health care, testified before Congress, and briefed directors of key federal agencies. From July to December, 2020, he served as a Special Advisor to President Trump and as a member of the White House Coronavirus Task Force. Before his appointment at the Hoover Institution, he was Professor and Chief of Neuroradiology at Stanford University Medical Center for fourteen years. He is the author of numerous books, including In Excellent Health: Setting the Record Straight On America’s Health Care, and most recently Restoring Quality Health Care: A Six-Point Plan for Comprehensive Reform at Lower Cost. He is also the editor of Magnetic Resonance Imaging of the Brain and Spine—the leading textbook in the field that has been translated into several languages, now in its 5th edition. His publications and interviews have appeared worldwide. Dr. Atlas has received many awards and accolades from leading institutions and societies all over the world in recognition of his leadership in policy and medicine. He was awarded the 2021 Freedom Leadership Award, Hillsdale College’s highest honor, “in recognition of his dedication to individual freedom and the free society.” He also received the 2011 Alumni Achievement Award, the highest career achievement honor for a distinguished alumnus from the University of Illinois in Urbana-Champaign. In the private sector, Atlas is a frequent advisor to start-up entrepreneurs and companies in life sciences and medical technology. He received his MD degree from the University of Chicago School of Medicine.

Book preview

Praise for

Restoring Quality Health Care

Too often, health policy sounds like the secret plan of a mystical cult—arcane, complex, and inaccessible. Scott Atlas is clear, concise, grounded in the facts and a model of elegant simplicity. And it will work!

—DOUGLAS HOLTZ-EAKIN, former director of the nonpartisan Congressional Budget Office; chief economist of the President’s Council of Economic Advisers (2001–02); and current president of the American Action Forum

Atlas gives us an informed view of how to achieve high quality in health care while bringing costs under control.

—GEORGE P. SHULTZ, Thomas W. and Susan B. Ford Distinguished Fellow, Hoover Institution, Stanford University; and former US secretary of state (1982–89)

Scott Atlas has written a book that is a must-read for anyone with a serious interest in health policy. Valuable insights and critical information appear on page after page. Read it. You won’t be disappointed.

—JOHN C. GOODMAN, president of the Goodman Institute for Public Policy Research

Improving access and excellence in health care and reducing its costs are core goals for all nations. Scott Atlas articulates with great clarity his original views on key US health system reforms to achieve these goals while preserving innovation to deliver on the promise of twenty-first century medicine.

—ELIAS A. ZERHOUNI, MD, former president of Global Research and Development for Sanofi, a leading global health care and pharmaceutical company; and fifteenth director of the National Institutes of Health (2002–08)

With its eminent scholars and world-renowned library and archives, the Hoover Institution seeks to improve the human condition by advancing ideas that promote economic opportunity and prosperity, while securing and safeguarding peace for America and all mankind. The views expressed in its publications are entirely those of the authors and do not necessarily reflect the views of the staff, officers, or Board of Overseers of the Hoover Institution.

hoover.org

Hoover Institution Press Publication No. 713

Hoover Institution at Leland Stanford Junior University, Stanford, California 94305-6003

Copyright © 2020 by Scott W. Atlas

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without written permission of the publisher and copyright holders.

For permission to reuse material from Restoring Quality Health Care: A Six-Point Plan for Comprehensive Reform at Lower Cost, Second Edition, by Scott W. Atlas, MD, ISBN 978-0-8179-2395-2, please access www.copyright.com or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400. CCC is a not-for-profit organization that provides licenses and registration for a variety of uses.

First edition, first printing 2016

Second edition, first printing 2020

272625242322212087654321

Cataloging-in-Publication Data is available from the Library of Congress.

ISBN 978-0-8179-2395-2 (pbk.)

ISBN 978-0-8179-2396-9 (ePub)

ISBN 978-0-8179-2397-6 (Mobipocket)

ISBN 978-0-8179-2398-3 (PDF)

To my father, who often joked, My mind’s made up, don’t confuse me with the facts.

Contents

List of Figures and Tables

Figures

1.1Relative Age Distribution of Total US Population, 2010–50; Relative Age Distribution of Senior US Population, 2020–50

1.2Prevalence of Obesity Population (Percent BMI > 30), Compared to Life Expectancy, United States and Selected OECD Nations

1.3Workers Funding Medicare per Medicare Beneficiary, Historical and Projections

1.4WHO Index Components

1.5Median Canadian Wait Times from GP Referral to First Specialist Treatment

1.6Two-Month Wait from GP Urgent Cancer Referral to First Treatment, NHS

1.7Availability of the World’s New Cancer Drugs by Country, within Two Years after 2013–17 Launch (as of December 2018)

1.8Comparison of Five-Year Survival Rate, United States versus Western Europe, 2000–2002, from Seven Common Cancers

1.9Comparison of Five-Year Survival Rates for Men and Women, United States versus Western European Nations

1.10High Blood Pressure: Access to Treatment and Successful Control. Percentage of Treated Patients by Country, Ages Thirty-Five to Sixty-Four Years

1.11Underpayment to Hospitals for Delivered Care, Medicare and Medicaid, 2004–17

2.1Impact of ACA Regulations on Private Insurance Premiums and Deductibles, First Four Years

2.2Percentage of Covered Employees with a Deductible of $2,000 or More, Single Coverage, by Firm Size and Year

2.3Deductible Distribution in High-Deductible Plans with Savings Account Options, by Year

2.4Growth Rates of Enrollment into High-Deductible Plans since ACA Passage

2.5Premiums by Plan Type, Before and After Passage of the ACA

2.6Acceleration of High-Deductible Health Plan Premium Increases (%) Before (2005–09) versus After (2009–14) Passage of ACA

3.1Enrollment in HSAs since Introduction, by Year

5.1Per Capita Health Care Expenses, by Age

5.2Additional Years of Life Expectancy in the United States for Sixty-Five-Year-Olds, 1965-2038

6.1Percentage of Doctors Accepting New Medicaid Patients, 2009 versus 2013 Overall, in Fifteen US Major Metropolitan Areas; Percentage of Medicaid-Contracted Providers Who Could Offer an Appointment to a New Medicaid Patient, by Type of Provider, 2014

7.1Projected Physician Shortages, by Field and Year, Median Ranges

7.2AAverage Generic Price and Number of Manufacturers after Initial Entry

7.2BThe Inflation-Adjusted Prescription Drug Price Index Has Decreased Significantly in 2017–19

7.3First Launches of New Cancer Drugs by Country, 1995–2005; Early Availability of New Cancer Drugs Launched 2009–14, by Country, as of 2014; US Share of First Launches of New Active Substances, World Market by Year, 1990–2010

7.4Clinical trials, by OECD Nation

Tables

1.1Additional Factors Influencing the Calculation of Life Expectancy

1.2Comparison of Disease Outcomes, Medicaid Patients versus Privately Insured Patients

3.1Health Savings Accounts, Selected Current versus Proposed Regulations

7.1Major Medical Innovations and Country of Origin

Q&A.1Impact of Atlas Plan on Private Savings and Costs, over Decade (Approximations)

Q&A.2Impact of Atlas Plan on Government Spending, over Decade (Approximations)

Preface

The enactment of the 2010 Affordable Care Act (ACA), commonly called Obamacare, catapulted health care reform into a dominant and highly controversial topic among Americans and a hotly contested issue in political campaigns. It is also emblematic of the overall debate in the United States about the role and reach of the US government in public policy. The ACA set forth two fundamental goals for reforming the US health care system: (1) to increase the insured population; and (2) to contain costs by increasing government control over health care. To accomplish these goals, new taxes and unprecedented regulatory authority of the federal government over health insurance and the health care industry were put in place. Its two core elements, a significant Medicaid expansion and subsidies for exchange-based private insurance, were projected to each cost about $850 billion to $1 trillion over the next decade, per Congressional Budget Office analysis. These changes were instituted while disregarding, indeed even doubling down on, the fundamental problems with the existing system—the perverse incentives that caused runaway costs and excluded millions of Americans from accessing the proven excellence of the world’s best medical care.

Beyond the notorious broken promises to Americans about keeping their doctors and their insurance plans, the ACA harmed America’s health care in demonstrable ways. The ACA did reduce the overall percentage of uninsured, declining from over 17 percent nationally to about 11 percent in recent Gallup polling. However, the bulk of those newly insured under the ACA were millions of low-income Americans funneled into substandard Medicaid coverage, despite the fact that fewer than half of doctors accepted new Medicaid patients, and ignoring the fact that half of doctors with contractual agreements to accept it in practice do not. That refusal of providers to accept Medicaid is not difficult to understand, given that Medicaid pays below the cost of administering the care—doctors and hospitals will not provide care broadly when they lose money per patient served. Even more troubling, Medicaid is widely documented to have worse health outcomes than private insurance, a reality that makes it unconscionable for politicians to celebrate its expansion for the poor.

Even though it is substandard in every meaningful way, expanding Medicaid costs taxpayers greatly. Although thought of as a state-based program, about 60 percent of its financing comes from Federal taxpayers and 40 percent from state budgets, totaling $630 billion in FY 2019. The ACA’s extensive regulations also made private insurance unaffordable for many. Premiums for individuals doubled, and they increased for families by 140 percent over four years, even though insurance deductibles (precoverage, out-of-pocket responsibility) also increased substantially. Under the ACA, massive taxpayer dollars were also spent to subsidize private insurance, yet doctor acceptance of that coverage and insurance options for patients worsened dramatically. Almost 75 percent of private plans in ACA insurance exchanges became highly restrictive, with reduced choice of hospitals and specialists. Moreover, the ACA generated a record pace of counterproductive consolidation across the sector, including anticonsumer mergers of doctor practices and hospitals that are generally associated with higher prices of care.

Today, the overall health care debate has substantively changed. In the wake of the ACA’s failure to address the system’s most important flaws, many former ACA supporters now push for an even more extreme takeover of the US system: overt single-payer health care, or Medicare for All. Advocates of single-payer care are disregarding established facts and ignoring decades of experience from countries with socialized medicine, as documented in the medical literature and by published statistics from those same governments. Many US political leaders are even proposing to outlaw private insurance, the coverage that over 200 million Americans use. Calls for single-payer health care fail to acknowledge that single-payer systems hold down costs by restricting access to doctors, procedures, technology, and drugs, and those systems have the expected results: worse outcomes, more deaths, and more suffering. With remarkable irony but unreported to Americans, those countries with the longest experience under government-centralized health systems, including the United Kingdom, Sweden, and many others, now use their taxpayer money to pay for private care to remedy their scandalous wait times and poor outcomes.

Health care reform is urgently needed. America’s aging population and the growing burden from lifestyle-induced diseases will increasingly require medical care at an unprecedented level. At the same time, we have entered an extraordinary era in medical diagnosis and therapy. Innovative applications of molecular biology, advanced medical technologies, new drug discoveries, and minimally invasive treatments promise earlier diagnoses and safer, more effective cures. Sophisticated big data analyses and artificial intelligence (AI) will likely generate new models of personalized health and delivery of care. The possibilities for improving health through technology have never been greater. Yet the current trajectory of the health care system threatens both the sustainability of the system and the essential climate for the innovation necessary to reach this potential.

It is time for a fundamentally different approach to meeting the significant health care challenges facing the nation. Facts matter, logic matters, and incentives matter. Instead of framing health care reform as reliant on more government regulation and focusing on reducing the cost of insurance, my plan centers on a completely different paradigm—restoring the appropriate incentives to lower the cost of medical care through competition, based on price and quality, for value-seeking patients. Like other goods and services in the United States, market competition for empowered consumers who control the money would reduce health care costs while increasing its quality. That, in turn, would reduce insurance premiums as well as expenditures from government health programs to accomplish the true goal—broadening access to high-quality health care for all Americans—without restricting access and limiting innovation, faults that are common to all single-payer, centralized systems.

I propose a six-point, strategic, competition-based reform plan for US health care. The foundation of my plan centers on fundamental principles integral to lowering the price of health care while enhancing its value. The plan harnesses the power of patients motivated to seek value, while breaking down anticonsumer barriers to competition among care providers by reducing the government’s counterproductive overregulation of health care. It restores the original purpose of health insurance: to protect against the risk of significant and unexpected health care costs. Using specific incentives and targeted deregulation, the proposals detailed in this plan enhance the availability and affordability of twenty-first-century medical care and ensure continued health care innovation. Once this plan is fully implemented, private national health expenditures will decrease by approximately $2.75 trillion over the decade, federal government health expenditures will decrease by approximately $1.5 trillion over the same period, and access to high-quality health care will significantly improve for everyone, especially the poor. These savings